The Philippine Defense Acquisition System

The Armed Forces of the Philippines has a 15-year modernization program that started in 2012 and will continue through 2027. The Republic Act (RA) 10349, also known as the Revised Armed Forces Modernization Act, was enacted to strengthen the AFP’s capability to address counterterrorism and internal threats. It was designed to protect defense modernization efforts from shifts in the country’s political climate.   The third milestone or horizon period (2023-2027) has a projected budget of US$4 billion. There are opportunities for the sale of aircraft, ships, unmanned vehicles, intelligence and surveillance systems, communications, personal protective equipment, and weapon systems. 

While preparing to enact a dedicated law on defense procurement, the Department of Defense (DND) and the Armed Forces of the Philippine (AFP) have underscored the importance of strengthening its defense procurement policy to address the current delays in major defense acquisitions. The DND and the AFP are governed by Republic Act 9184 (Government Procurement Reform Act). The DND implements the Defense Acquisition System (DAS) which covers the department-wide medium and long-term acquisition programs. It provides a coherent framework for conducting and managing DND and AFP acquisition efforts. The DAS entails assessing the relative merits of different ways of satisfying an approved defense requirement and has two functions: (1) acquisition planning, and (2) procurement and contracting.  

The methods of procurement under RA 9184 include: (1) Negotiated Procurement thru Government-to-Government Arrangements (RA Section 4.2 and Section 53.8); (2) Negotiated Procurement thru Emergency Procurement (Section 53.2); (3) Limited Source Bidding (Sec 49.4); and (4) Direct Contracting (Section 50).

The AFP Modernization Program also requires that no major equipment and weapons system shall be purchased from any vendor if the same are not being used by the armed forces in the country of origin or used by the armed forces of at least two other countries. The AFP also mandates that a supply contract shall not be entered into unless such contract provides for, in clear and unambiguous terms, an after sales and availability of spare parts.

U.S. firms interested in supplying the AFP need to find a local representative and conduct a capability brief to the appropriate service command. The local representative must be familiar with the procedures, nuances, and documentary requirements of the Government Procurement Reform Act (GPRA). Foreign companies can bid directly for large defense procurement projects, but a local representative is still required to monitor project development, funding source, budget release, changes in specifications, procurement schedule, and other relevant information.

Apart from its modernization program, the Philippine Security Forces (AFP, all Service Commands, and the Philippine Coast Guard) receive an average of US$120-125 million annually in U.S. grant funds. Foreign Military Sales (FMS) and all U.S. grant assistance programs are handled by the Joint U.S. Military Assistance Group (JUSMAG) Philippines.

For more information, please contact Thess Sula, Commercial Specialist, U.S. Commercial Service Philippines at Thess.Sula@trade.gov.